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Top Student Forgiveness Programs of 2021

by Abdul Shaikh
Top Student Forgiveness Programs of 2021

Student loan forgiveness has become a popular personal finance topic a while now as the Biden Administration proposed to forgive $10,000 in federal student loans. 

But as it stands now, several student forgiveness programs forgive any remaining student loan balance. That is after making qualifying payments for 10 or 25 years for most federal student loans. 

Private student loans are not eligible for federal student forgiveness programs. But such student loans can be forgiven due to a total or permanent disability or death. Private or federal student loans can get forgiveness when borrowers declare bankruptcy, but only in rare instances. 

If you have private student loans, it will help if you considered refinancing your student loans. That will help decrease the financial burden. 

Options Of Student Loan Forgiveness To Consider 

Private student loans don’t have the same forgiveness benefits as federal student loans. But there are multiple options to consider depending on your financial situation and type of loan. These options can help you save money on student loans. 

Here’s what you need to know about student forgiveness programs, whether you’re a federal or private student loan borrower. 

Private Student Loan Forgiveness Options 

Refinancing private student loans is one of the popular alternatives for acquiring a flexible loan term and saving money. Refinancing your loan can give you lower monthly payments when you qualify for lower interest rates. 

As a current college student, you can request a deferment, including people working for specific employers such as the Peace Corps or the military. If you experience economic hardship, you can request a loan for forbearance. During the grace periods, your payments every month will pause, but interest can accumulate. 

Federal Student Loan Forgiveness Programs 

Currently, most federal student loans are under temporary forbearance with no interest. It will go through September 30, 2021, but it doesn’t automatically qualify for student loan forgiveness. In the forbearance duration, each monthly payment that is deferred is eligible for student loan forgiveness. 

Direct Loans have the most forgiveness benefits. Perkins Loans and FFEL can also qualify. If you have a non-direct loan, you may have to consider consolidating them into a Direct Consolidation Loan. That will ensure that you are eligible for student loan forgiveness. 

Also, when you consolidate your loans, you restart your payment history. That means previous loan payments won’t be eligible for loan forgiveness. The following are the most common forgiveness alternatives: 

  1. Income-driven repayment forgiveness 

The U.S. Education Department offers four income-based repayment plans. Each plan has different requirements and repayment terms but caps a borrower’s payment each month to a percentage of their current income. 

If you take this plan, you may need to pay back your student loans every month for up to 25 years. Only then can your remaining balance can be forgiven. You can contact your loan services to help you choose the right repayment plan suitable for your condition. 

However, if you don’t like to wait for decades for loan forgiveness, you can refinance your student loans. It’s possible to get a shorter repayment term that can help you save money. However, if you refinance your federal student loans with a private lender, you forfeit all forgiveness benefits. 

  1. Public Service Loan Forgiveness (PSLF) 

If you’re a full-time non-profit or government employee, you can qualify for the PSLF program. You get forgiven on your remaining Direct Loans balance after ten years of qualifying payments. 

If you qualify for PSLF, you can enroll in income-based repayment plans to decrease your monthly payment amount.

  1. Teacher Loan Forgiveness 

With the Teacher Loan Forgiveness, you can get loan forgiveness to a maximum of $17,500 for Direct Subsidized and Unsubsidized Loans. But you’ll need to teach full-time in a qualifying school or educational agencies for five consecutive academic years to be eligible. 

  1. State-Sponsored Repayment Assistance Programs 

Most states in the United States offer student loan assistance programs, at least one. These programs usually take care of a partial loan balance in vital need career fields requiring high student loan debt. 

However, most of these programs focus on recruiting attorneys and health care professionals. 

  1. Perkins Loans 

Perkins Loans are directly issued from the university, even though the government subsidizes them. The new Perkins Loans closed in 2017. However, the existing Perkins Loans in repayment can be eligible for full or partial loan forgiveness for either volunteering, teaching, or government positions. 

Student Loan Forgiveness Is Now Tax-Free

Student loan forgiveness is now tax-free, thanks to the provision included in the $1.9 stimulus package that Biden signed into law. Previously, any student debt forgiven by the federal government was taxable and levied at the borrower’s regular income tax rate. 

But how much can it help borrowers? 

Borrowers that will get the most impact of this change will be those in income-driven repayment plans. These repayment plans cap your monthly bills at a percentage of your discretionary income. 


There are numerous income-based and career student forgiveness programs. But it takes several years or even decades to be eligible, and the benefits are for only federal student loans. Regardless, it’s possible to get rid of your student loans and become financially free with the listed forgiveness programs. 

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